The gig economy – flexible working for the new age or worker exploitation?

This post has been contributed by Lisa Kidger, Subject Content Developer for Labour Law.

There has always been a tension between the desire of an individual to earn money and have favourable working conditions, and the desire of an employer to keep costs to a minimum. Employment law helps keep the balance by imposing minimum terms, such as the national minimum/living wage and paid holiday, but such terms are dependent on the individual’s employment status. Only employees get the full weight of employment law protection, with lesser rights given to workers, and self-employed persons having none.

Employers, keen on reducing the burden and cost of these employment rights, have been helped by technology enabling and inducing a wish for more flexible working practices. Hence the rise of the “gig economy”. With the gig economy, individuals choose to perform short-term ‘gigs’, such as delivering a pizza or driving a person to a destination. This allows for flexibility, in that the individual can choose whether or not to take on a gig, and can fit it around other commitments. The downside for such individuals is that they are classed as self-employed, and so lose the right to sick pay, holiday pay and a myriad of other employment law rights.

pizza boxesHowever, the growth of the gig economy in the UK is being checked by tribunals and courts, which have held that some of the people performing these gigs are workers rather self-employed. Recently both Uber (http://www.bbc.co.uk/news/business-37802386) and City Sprint (http://www.independent.co.uk/news/business/news/london-bike-courier-wins-gig-economy-legal-battle-a7514926.html) have lost legal battles where they tried to argue that their gig workers were self-employed (although appeals are likely).

The government also has concerns that the gig economy could affect the UK economy, particularly as more self-employed individuals mean fewer national insurance contributions. As a result, the Government has ordered an inquiry into the gig economy and has recently questioned Uber, Amazon, Deliveroo and Hermes on their business models (http://www.parliament.uk/business/committees/committees-a-z/commons-select/work-and-pensions-committee/inquiries/parliament-2015/self-employment-gig-economy-16-17/).

It’s an uncertain time for both gig economy companies. More claims are expected and the results of the Government’s inquiry might start imposing constraints on this modern working practice. Whatever the outcome, it’s clear that employment law must evolve to meet the needs of the current workforce.

 

 

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